Investing.com – Optimism that the United States and China can agree on a partial trade deal at least, along with reports of an attack on an Iranian oil tanker, drove crude prices up by nearly 2% on Friday, their most in nearly a month.
U.S. West Texas Intermediate crude was up $1.09, or 2%, at $54.64 per barrel by 1:27 PM ET (17:27 GMT).
U.K. Brent oil rose $1.28, or up 78 cents, or 2.2%, to $60.38.
It was oil's biggest rally since the run-up in the aftermath of the Sept. 14 attacks on Saudi Arabian oil facilities that drove the market up nearly 15% in a day.
But some traders said they were still poised to sell in the new week if the trade deal did not materialize and calm returned to the Persian Gulf.
“We’ve seen what’s happened so far with U.S.-China negotiations, and until it’s there in print and endorsed by the Chinese, it’s not done,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The tensions in the Gulf have also dissipated almost as quickly as they began, so that’s another factor to consider."
Risk assets across markets rose on Friday as hopes ran high that talks between President Donald Trump and Chinese Vice Premier Liu He in Washington would culminate in a partial trade deal and delay planned U.S. tariff increases against Beijing. Trump meets Liu in the White House at 2:45 PM ET (18:45 GMT) after two days of top-level discussions between the two sides.
Crude prices also spiked earlier on Friday after Iranian claims of an attack on one of its oil tankers ran into skepticism, while the International Energy Agency also tempered buying interest by again trimming its forecasts for global oil demand.
Iranian national news agency IRNA said the tanker Sabiti, sailing through the Red Sea, had been struck by two unidentified objects believed to be missiles, causing a fire and oil leakage into the sea.
But the Iranian government later undermined the credibility of the report by saying that the ship had not been set on fire. IRNA also cited the National Iranian Oil Company as denying suggestions that it had been struck by missiles fired from Saudi Arabia.
The consultancy Tankertrackers.com noted that Sabiti was still making surprisingly good speed after the attack.
The International Energy Agency, meanwhile, downgraded its forecast for global oil demand growth next year by 100,000 barrels a day. It also cut its forecast for 2019 by a similar amount, but said this was due to changes in the calculation of last year’s output.
In addition, it noted that petroleum stocks in advanced economies had increased for the fifth consecutive month in August, leaving them close to the record levels seen in 2016, when they topped 3 billion barrels.